As hyperinflating Venezuela's latest experiment in monetary lunacy continues with president Maduro announcing earlier this week he would remove 75% of the physical cash in circulation by eliminating the highest denomination 100 Bolivar bill, desperate and cashless Venezuelans, angry that the government hasn’t exchanged their voided bank notes as officials had pledged, on Friday rose up in protest and looted stores across parts of Venezuela.
Waving the now-worthless 100-bolivar bills, pockets of demonstrators blocked roads, demanded that stores accept the cash, and cursed President Nicolas Maduro in a string of towns and cities around Venezuela, witnesses said.
A man holds a bone and a placard that reads 'Maduro: communist, unhappy,
damn. Resign, now', in front of a pole covered with 100-bolivar bills during a
protest in El Pinal, Venezuela, December 16, 2016.
Waving the now-worthless 100-bolivar bills, pockets of demonstrators blocked roads, demanded that stores accept the cash, and cursed President Nicolas Maduro in a string of towns and cities around Venezuela, witnesses said. Dozens of shops were looted in various places.
An opposition legislator said there were three deaths amid violent scenes in the southern mining town of Calla.
The riots were quickly put down, however, when National Guard troops were deployed to put down the unrest that broke out as far west as the Colombian border as well as smaller towns in the east, the WSJ reports. While many have speculated that things couldn't possibly get worse in Venezuela, they did over the past few days as the collapsing, cash-based economy suddenly finds itself without cash, worthless as it may be (one US dollar is worth between 2,500 and 4,500 Bolivars in the black market), and now with only nine days to go before Christmas, Venezuelans grappling with a collapsing economy and hyperinflation are also left without money. Only the Central Bank now accepts the remaining bill, and it will only do so until Tuesday at which point the paper money will be worth less than toilet paper, which Venezuela infamous does not have.
“Maduro is making a mockery of the people, and he has destroyed Christmas for all Venezuelans,” said Desiré Chávez, a 33-year-old clothing vendor in Maracaibo who had accepted the 100-bolivar notes until Thursday. “Now I don’t know what I’ll do because that cash is useless and my kids are hungry.”
As the local population fumes, the central bank office didn’t open Friday to facilitate the exchange, as officials had promised. Troops turned away nearly 1,500 people who had lined up starting Thursday night to turn in their useless bills, prompting angry mobs to block traffic and riot. Dozens were arrested.
Unlike India, where the local population was at least granted a two month onboarding period to convert their old cash into new bills - which has also led to mass confusion and a sharp economic slowdown - Maduro gave his countrymen only days to turn in the 100-bolivar notes, which until this week was the nation’s most widely used bank note.
“There have and will be difficulties while we overcome this situation,” Mr. Maduro said in a televised speech Friday. He called the measure necessary to combat alleged currency speculators in neighboring Colombia and elsewhere that he blames for his country’s economic troubles. “I appreciate the people of Venezuela’s understanding, awareness, all of its support.”
Making matters worse, the new 500-bolivar bills that the president said would circulate this week have yet to be distributed, causing panic as more than a third of Venezuela’s 30 million people lack a bank account. Those lucky enough to line up at the central bank headquarters in the capital, Caracas, were able to at least deposit their money. They were given IOUs and told they could pick up the new bills when they are ready.
It is unclear when that may be, meaning the vast majority of those Venezuelans with savings don't even have an official currency to show for it, but merely an unofficial promise of repayment from the government. More skeptical readers may view this as a clear overture for full-blown cash confiscation.
“I don’t have a bank account, and they need to tell me what I do with this money,” said Ana Garza, a 58-year-old cake vendor from a Caracas slum who had been waiting since 5:30 a.m. in a line that stretched 18 city blocks on Friday. She only had money for a bus ride because no one is accepting the 100-bolivar bills anymore.
The anger was palpable: “I don’t have words for this measure from Maduro,” griped bus driver Ricardo Salas, 54. “How do you get rid of these bills without the new ones arriving? Buying groceries is going to be horrible.” Assuming there are groceries: as a result of Venezuela's hyperinflation and economic collapse, most supply chains no longer operate, and those businesses which still function do so increasingly solely on a barter basis.
There was some good news: the WSJ reported that on Thursday, the central bank received at least one shipment of new 500-bolivar bills, but it would take weeks for enough 500-bolivar bills to be available to alleviate the scarcity of cash. Without money, residents in the southeastern state of Bolivar blocked the only major highway in the region that connects the country to Brazil. Nearly 40 businesses, mostly grocery stores, were ransacked around the state.
Faced with daily violent protests, the government was just as unhappy as the general population: “this has gone from a riot over discontent and hunger to vandalism,” said Erick Leiva, head of a local business chamber.
Maduro this week also "temporarily" closed the Venezuela's border with neighboring Colombia and Brazil, supposedly to crack down on currency speculation along the border, which he blames for the free-falling value of the bolivar, in order to deflect attention from the real cause of Venezuela's economic collapse.
The desperation was palpable for people like Daniel Morales, 28, a street vendor in Maracaibo.
“I have an 11-day-old baby and I haven’t been able to buy diapers, nor milk,” he said. All of the bills that Mr. Morales had taken to the central bank branch to exchange added up to 20,000 bolivars, or less than $9. A pack of diapers costs more.
What is surprising, is that despite Venezuela's complete economic collapse, and now effective demonetization, the country remains technically solvent and continues to pay its foreign creditors; we also find it surprising that despite Venezuela's de facto military regime - as we reported previously Maduro is now just a front for the army's control of the country - the population has shown tremendous patience and has so far refused to revolt, despite having little left to lose.